In recent years, Chinese automakers have aggressively expanded their presence in Europe, hoping to capitalize on the growing demand for electric vehicles. However, despite their initial ambitions, their growth has not been as strong as anticipated. In fact, 2024 marked the first year of declining sales figures for Chinese car manufacturers in the European market, and in 2025 the expectation are not optimistic due to the new tariffs.
A recent study by Escalent, a U.S.-based research and consulting firm, sheds light on what these companies need to do to achieve significant improvements. According to the report, success in Europe will largely depend on one critical factor: price.
The Key to Success: lower prices
The study suggests that if Chinese automakers want to compete effectively, they must implement substantial price reductions. A 10% price cut could persuade one in ten European drivers to consider purchasing a Chinese-made EV. This conclusion is based on a survey of more than 1,600 car owners across France, Germany, the United Kingdom, Spain, and Italy. Notably, Spain and Italy emerged as the most price-sensitive markets, since they’re the two countries with the lowest salaries compared to the others, and with an increasing cost of life (especially in Italy).
However, the report also highlights a more concerning figure: on average, surveyed consumers would require a price reduction of around 27% before seriously considering a Chinese EV. Such a drastic discount is nearly impossible to sustain, especially in light of increasing trade barriers imposed by the European Union.
The introduction of EU tariffs on Chinese EVs has further complicated the situation. Instead of gaining a competitive edge, some Chinese electric cars are now more expensive than their European counterparts. In Germany, for example, the locally produced Volkswagen ID.3 starts at €33,330, while the China-made MG4 has a higher starting price of €34,990.
These tariffs have significantly reduced the price advantage that Chinese brands once enjoyed, forcing them to reconsider their strategies in order to remain competitive.
Building brand reputation
Beyond pricing, the study emphasizes the importance of brand reputation. European consumers tend to trust well-established car manufacturers that have been present in the market for decades. Without this trust, Chinese brands face an uphill battle in convincing buyers to make the switch.
To address this, several Chinese automakers are investing in cutting-edge technology and high-performance models—not necessarily to drive high sales volumes but to showcase their capabilities. By offering technologically advanced vehicles, they hope to gain credibility and gradually build their reputation among European consumers.
